ACO savings from managing chronic kidney disease totaled $12 million in year one, $26 million in year two

BUILDING ON THE LESSONS IT LEARNED by developing lab services that helped primary care physicians identify, diagnose, and treat diabetes patients in their practices, Sonic Healthcare USA was ready to do the same for another disease.

Sonic wanted to go beyond simply reporting an accurate and timely lab test result. Instead, it wanted to leverage the value of its lab test data to help client physicians achieve better patient outcomes and contribute to lower costs of care—and be paid based on these benefits as they were realized.

This second chapter in Sonic’s added-value story came quickly. After Sonic Healthcare USA achieved strong results in the diagnosis and treatment of diabetes for its client—a federally qualified health care clinic in New York—other Sonic clients became interested in working with Sonic to contact their patients who had gaps in care.

How to Reach Patients

“Once we deployed the technology for the first site, other clients—including ACOs and other payers—started coming to us with ideas about the patients they wanted to reach,” said Philip C. Chen, MD, PhD, Sonic’s Chief Healthcare Informatics Officer.

“Among those clients, there was much interest in managing patients with chronic kidney disease (CKD),” he explained. “With CKD, only about 12% of patients are diagnosed. Many are missed because these patients are asymptomatic, especially in the early stages.”

The National Institute for Diabetes and Digestive and Kidney Diseases estimates that about 14% of the population has CKD. “This rate of illness and the cost of caring for these patients means there could be a significant source of revenue for clinical laboratories that have value-based contracts with payers seeking to identify and manage these patients,” observed Chen.

To identify CKD patients, Sonic monitors the estimates of glomerular filtration rate (eGFR) by collecting two laboratory values at least three months apart. The GFR test measures the level of creatinine in the patient’s blood to calculate the eGFR, a number that reflects how well the kidneys function.

“In one study of about 250,000 patients, researchers determined that—of those patients in stages 1, 2, and 3—about 90% were not diagnosed,” Chen said. “Many times, even those in stages 4 and 5 and who were symptomatic, were still not diagnosed. Our own data show an almost identical distribution of the under-diagnosis rate.

“When establishing a financial arrangement based on identifying CKD patients, financial costs are compared with that of a normal person,” he added.

“With a Medicare population, there is a $15,000 greater yearly cost for a patient who does not have that diagnosis versus a patient who does have the CKD diagnosis,” Chen noted. “This substantial cost makes it important for ACOs, managed Medicare, and managed Medicaid plans to identify those undiagnosed patients with CKD and ensure that physicians follow up to document that diagnosis, so as to receive the appropriate financial attributions.

“Using our own lab-driven data, we work with ACOs and managed Medicare and Medicaid plans to help them manage CKD patients,” he said. “During a meeting with one health plan in Texas, the administrators complained about how hard it was to identify CKD patients. To do so, they had about 20 nurses scour medical charts to find these patients. They understood the higher costs incurred by these undiagnosed patients, but didn’t have an efficient way to identify them.

File with All CKD Patients

“Before I attended this meeting, I didn’t know they had 20 nurses working on this specific project,” he added. “I came to this meeting with the plan’s data because we had cared for their patients for some time. Therefore, I was able to hand the health plan administrators a file showing all their patients who had CKD—both those with a diagnosis and those without a CKD diagnosis.

“This is the power of what we can do with laboratory data that adds value to both health insurers and physicians,” stated Chen. “Sonic provides both the analytics and the patient-contact tools to bring those patients into the clinics so that they can be properly coded and managed.”

“The next step in such a discussion is to use the data to get paid,” Chen commented. “One approach we use is what we call a ‘Healthcare Informatics and Preferred Provider Agreement.’ CPL, our Texas-based laboratory, has such an agreement in place with a large, physician-owned ACO in North Texas that has a shared savings arrangement with Medicare.

“When we first started with them, they had 450 providers scattered over 135 different practices,” he said. “Once we showed them our data and patient-contact tools, they wanted to integrate that information into their care management system. That allowed them to put the data into a central repository and use it to do additional analytics and interventions.

Lab Became ACO Provider

“Through a waiver designed for ACOs in the Medicare Shared Savings Program (MSSP)— we offered to deploy all these technologies at the ACO providers’ practices—our lab was asked to join the ACO as a provider,” noted Chen. “Today, we are one of the ACO’s provider groups and our lab can deploy these technologies to help all of the providers achieve significant savings—savings that every provider, including our lab—can share in once it reaches a certain threshold.

“In the first year after deploying these tools, savings totaled about $12 million,” he said. “But also in that first year, there was some noise in the data. So, despite the actual savings observed, the needle did not move much higher than was expected.

Savings of $26 Million

“That all changed in year two, when the savings jumped to $26 million, as a result of our program and other population health management tools the ACO deployed,” Chen recalled. “Our lab thus got a very nice share of those savings.

“Under this contract, CPL gets paid with a traditional fee-for-service arrangement for laboratory tests,” he concluded. “But we also got paid based on the savings we achieved with the technology we deployed and the value it delivered to patient care and reducing the cost of care. Most importantly, our lab is contributing value in ways that allow us to tap this different pile of money.”